Question 1

You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (1)  the demand (D)  for, or supply (S)  of, X, (2)  the equilibrium price (P)  of X and (3)  the equilibrium quantity (Q)  of X.Refer to the above.An increase in the price of a product which is a close substitute for X will:

Accepted Answer

A)  decrease D, increase P, and decrease Q.
B)  increase D, increase P, and decrease Q.
C)  increase D, increase P, and increase Q.
D)  increase D, decrease P, and increase Q.E) A) and C)
F) C) and D)

Question 2

A price ceiling means that:

Accepted Answer

A)  there is currently a surplus of the relevant product.
B)  government is imposing a legal price which is below the equilibrium price.
C)  government wants to stop a deflationary spiral.
D)  government is imposing a legal price which is above the equilibrium price.E) B) and C)
F) C) and D)

Question 3

A market demand schedule for a product indicates that:

Accepted Answer

A)  as the product's price falls, consumers buy less of the good.
B)  there is a direct relationship between price and quantity demanded.
C)  as a product's price rises, consumers buy less of other goods.
D)  there is an inverse relationship between price and quantity demanded.E) A) and B)
F) A) and C)

Question 4

If the demand curve for product B shifts to the right as the price of product A declines, it can be concluded that:

Accepted Answer

A)  both A and B are inferior goods.
B)  A is a superior good and B is an inferior good.
C)  A is an inferior good and B is a superior good.
D)  A and B are complementary goods.E) B) and D)
F) None of the above

Question 5

2 because landlords abandon rental units, but rent controls remain, the quantity demanded for housing would be at point: A) d and the quantity supplied at point a. B) g and the quantity supplied at point b. C) f and the quantity supplied at point d. D) g and the quantity supplied at point a." class="answers-bank-image d-inline" rel="preload" > Refer to the above graph, which shows the supply and demand for rental housing in a city.If over time the supply curve shifts to S2 because landlords abandon rental units, but rent controls remain, the quantity demanded for housing would be at point:

Accepted Answer

A)  d and the quantity supplied at point a.
B)  g and the quantity supplied at point b.
C)  f and the quantity supplied at point d.
D)  g and the quantity supplied at point a.E) None of the above
F) All of the above

Question 6

By an "increase in demand" we mean:

Accepted Answer

A)  that product price has fallen so consumers move down to a new point on the demand curve.
B)  the quantity demanded at each price in a set of prices is greater.
C)  the quantity demanded at each price in a set of prices is smaller.
D)  none of the above.E) A) and C)
F) None of the above

Question 7

What combination of changes in supply and demand would most likely increase the equilibrium quantity?

Accepted Answer

A)  when supply increases and demand increases
B)  when supply decreases and demand decreases
C)  when supply decreases and demand increases
D)  when supply increases and demand decreasesE) A) and C)
F) B) and C)

Question 8

Data from the registrar's office at Informed University indicate that over the past twenty years tuition and enrollment have both increased.From this information we can conclude that:

Accepted Answer

A)  higher education is an exception to the law of demand.
B)  the supply of education provided by IU has also increased over the twenty-year period.
C)  school-age population, incomes, and preferences for education have changed over the twenty-year period.
D)  IU's supply curve of education is downward sloping.E) A) and D)
F) A) and B)

Question 9

If peanut butter and grape jelly are complementary products, which diagram above illustrates the effect on the peanut butter market as a result of a decrease in the price of grape jelly?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) A) and B)
F) A) and C)

Question 10

A normal good is defined as one:

Accepted Answer

A)  whose amount demanded will increase as its price decreases.
B)  whose amount demanded will increase as its price increases.
C)  whose demand curve will shift leftward as incomes rise.
D)  the consumption of which varies directly with incomes.E) C) and D)
F) A) and B)

Question 11

The concept of economic efficiency is primarily concerned with:

Accepted Answer

A)  the limited wants-unlimited resources dilemma.
B)  considerations of equity in the distribution of wealth.
C)  obtaining the maximum output from available resources.
D)  the conservation of irreplaceable natural resources.E) All of the above
F) C) and D)

Question 12

Which of the above diagrams illustrate(s)  the effect of a governmental subsidy on the market for AIDS research?

Accepted Answer

A)  A only
B)  B only
C)  C only
D)  D onlyE) All of the above
F) None of the above

Question 13

In constructing a stable demand curve for product X:

Accepted Answer

A)  consumer preferences are allowed to vary.
B)  the prices of other goods are assumed to be constant.
C)  money incomes are allowed to vary.
D)  the supply curve of product X is assumed to be fixed.E) A) and B)
F) C) and D)

Question 14

If demand for a good decreases and supply remains constant, equilibrium price:

Accepted Answer

A)  and quantity will both increase.
B)  will increase, and equilibrium quantity will decrease.
C)  will decrease, and equilibrium quantity will increase.
D)  and quantity will both decrease.E) None of the above
F) B) and C)

Question 15

The further a ceiling price is below the equilibrium price, the smaller will be the shortage of the product.

Accepted Answer

A) True 
 B)False

Question 16

An effective ceiling price will:

Accepted Answer

A)  induce new firms to enter the industry.
B)  result in a product surplus.
C)  result in a product shortage.
D)  clear the market.E) C) and D)
F) None of the above

Question 17

At the point where the demand and supply curves for a product intersect:

Accepted Answer

A)  the "selling price" and the "buying price" need not be equal.
B)  the market may, or may not, be in equilibrium.
C)  either a shortage or a surplus of the product might exist, depending on the degree of competition.
D)  the quantity which consumers want to purchase and the amount producers choose to sell are the same.E) All of the above
F) A) and B)

Question 18

If a product is in surplus supply, we can conclude that its price:

Accepted Answer

A)  is below the equilibrium level.
B)  is above the equilibrium level.
C)  will rise in the near future.
D)  is in equilibrium.E) B) and C)
F) None of the above

Question 19

If the supply of a product decreases and demand increases, the equilibrium price and quantity will increase.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is correct?

Accepted Answer

A)  If demand increases and supply decreases, equilibrium price will fall.
B)  If supply increases and demand decreases, equilibrium price will fall.
C)  If demand decreases and supply increases, equilibrium price will rise.
D)  If supply declines and demand remains constant, equilibrium price will fall.E) C) and D)
F) A) and B)

Exam 3: B: Demand, Supply, and Market Equilibrium

A normal good is defined as one:

Correct Answer
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In constructing a stable demand curve for product X:

Correct Answer
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Data from the registrar's office at Informed University indicate that over the past twenty years tuition and enrollment have both increased.From this information we can conclude that:

Correct Answer
verified

If the supply of a product decreases and demand increases, the equilibrium price and quantity will increase.

Correct Answer
verified

The further a ceiling price is below the equilibrium price, the smaller will be the shortage of the product.

Correct Answer
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An effective ceiling price will:

Correct Answer
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If the demand curve for product B shifts to the right as the price of product A declines, it can be concluded that:

Correct Answer
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At the point where the demand and supply curves for a product intersect:

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Refer to the above graph, which shows the supply and demand for rental housing in a city.If over time the supply curve shifts to S₂ because landlords abandon rental units, but rent controls remain, the quantity demanded for housing would be at point:

Correct Answer
verified

By an "increase in demand" we mean:

Correct Answer
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If demand for a good decreases and supply remains constant, equilibrium price:

Correct Answer
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The concept of economic efficiency is primarily concerned with:

Correct Answer
verified

If a product is in surplus supply, we can conclude that its price:

Correct Answer
verified

A market demand schedule for a product indicates that:

Correct Answer
verified

A price ceiling means that:

Correct Answer
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Correct Answer
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Which of the above diagrams illustrate(s) the effect of a governmental subsidy on the market for AIDS research?

Correct Answer
verified

What combination of changes in supply and demand would most likely increase the equilibrium quantity?

Correct Answer
verified

If peanut butter and grape jelly are complementary products, which diagram above illustrates the effect on the peanut butter market as a result of a decrease in the price of grape jelly?

Correct Answer
verified

Exam 3: B: Demand, Supply, and Market Equilibrium

A normal good is defined as one:

Correct AnswerverifiedShow Answer

In constructing a stable demand curve for product X:

Correct AnswerverifiedShow Answer

Data from the registrar's office at Informed University indicate that over the past twenty years tuition and enrollment have both increased.From this information we can conclude that:

Correct AnswerverifiedShow Answer

If the supply of a product decreases and demand increases, the equilibrium price and quantity will increase.

Correct AnswerverifiedShow Answer

The further a ceiling price is below the equilibrium price, the smaller will be the shortage of the product.

Correct AnswerverifiedShow Answer

An effective ceiling price will:

Correct AnswerverifiedShow Answer

If the demand curve for product B shifts to the right as the price of product A declines, it can be concluded that:

Correct AnswerverifiedShow Answer

At the point where the demand and supply curves for a product intersect:

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Refer to the above graph, which shows the supply and demand for rental housing in a city.If over time the supply curve shifts to S2 because landlords abandon rental units, but rent controls remain, the quantity demanded for housing would be at point:

Correct AnswerverifiedShow Answer

By an "increase in demand" we mean:

Correct AnswerverifiedShow Answer

If demand for a good decreases and supply remains constant, equilibrium price:

Correct AnswerverifiedShow Answer

The concept of economic efficiency is primarily concerned with:

Correct AnswerverifiedShow Answer

If a product is in surplus supply, we can conclude that its price:

Correct AnswerverifiedShow Answer

A market demand schedule for a product indicates that:

Correct AnswerverifiedShow Answer

A price ceiling means that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the above diagrams illustrate(s) the effect of a governmental subsidy on the market for AIDS research?

Correct AnswerverifiedShow Answer

What combination of changes in supply and demand would most likely increase the equilibrium quantity?

Correct AnswerverifiedShow Answer

If peanut butter and grape jelly are complementary products, which diagram above illustrates the effect on the peanut butter market as a result of a decrease in the price of grape jelly?

Correct AnswerverifiedShow Answer

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Refer to the above graph, which shows the supply and demand for rental housing in a city.If over time the supply curve shifts to S₂ because landlords abandon rental units, but rent controls remain, the quantity demanded for housing would be at point:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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